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Don't Blame Our Policies Says Bank of Canada Governor

Bank of Canada Governor Stephen Poloz has laughed off current speculation that he is trying to deliberately weaken the Canadian dollar in an attempt to boost growth. Poloz insists that the current decline in the dollar is a reflection of a deterioration in the economy's outlook, and that the Bank of Canada is not to blame. Currently in Istanbul to attend a meeting of finance chiefs from the Group of 20, he stated that he rejected the notion that he was purposely trying to take down the dollar, “it's not about what we did,” he explains, “it's about how the economy has behaved.”

Recently the Canadian dollar has lost roughly 18% against the US Dollar, since Poloz became Governor back in June 2013. In the beginning of the year he unexpectedly cut interest rates by 0.25 percentage point to 1% and since then the dollar has fallen 2.9% against the US Dollar. Unfortunately, Lowering the rates is only going to add more fuel to artificial bubbles, like the current real estate bubble being experienced in many Canadian cities. It may stimulate certain areas and encourage first-time buyers to sign-up, but in the long run the bubble inevitably will burst. These low interest rates only foster malinvestment, and it has already been warned that a major correction is coming within the currently inflated housing market.

The power of the Federal Government of Canada to create its own currency for the nation is clearly stated in the Canadian Constitution, Section 91, paragraphs 14, 15, 16, 18, 19, and 20. Why then does the Bank of Canada allocate the responsibility of currency creation to foreign banks, choosing to borrow the money at interest, rather than create its own? This exchange renders the nation with an inescapable debt, as we see now the Canadian debt currently stands at over $1.2 trillion.

Although this main fiat currency structure may not be solely to blame for the current dip in the market, it is clear to understand how such an arrangement would not be beneficial to Canadians, or anyone seeking to have a prosperous economy. The policies that the Bank of Canada operates with are directly responsibly for a weak currency in general, when our currency system inherently breeds inflation and it is only backed by other similarly weak fiat currencies. I won't be surprised when the currency continues to weaken in the future, the further we continue with the charade, the more purchasing power we are going to lose. As a response to the irrationality of such a currency system, the Bank of Canada is currently engaged in a lawsuit, in an effort to have the power of currency creation placed back into the hands of Canadian representatives rather than foreign banks. In the hopes that the same runaway debt and irresponsible economic fiat policies won't continue.